Fannie Mae and Freddie Mac launched their new mortgage guidelines that went into effect last December 1st, now requiring a much lower down payment. From the previous 5% to 3% in what lenders hope will be a good kick start from a sluggish housing market that we have seen lately.
Now the brain trust at WalletHub has released its 2014 Mortgage Insurance Report to help low-down-payment home buyers save up to $12,000 on their decision between a Federal Housing Administration loan and private mortgage insurance.
On the other hand FHA premiums, unlike private mortgage insurance, continue to be assessed throughout the life of a loan, even if the loan to value ratio drops below 80%. This creates a huge cost disparities over time, between private mortgage and the FHA option.
New mortgage guidelines are expected to significantly increase the availability of more new purchases.
The Federal Deposit Insurance Corporation is the first of six financial regulators to release the final version of the long-awaited qualified residential mortgage (QRM) rule. The National Association of Realtors applauds this action because it will make possible to incorporate rules that include a broad definition for Qualified Mortgage standards implemented earlier this year.
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Under the QRM rule, loans are generally considered qualified if the borrower’s debt-to-income ratio is 43 percent, among other things and there is not onerous down payment requirement, as regulators had originally proposed.
The NAR strongly opposed earlier versions of the rule that included 20 and 30 percent down payment requirements, which would have denied millions of Americans access to the lowest-cost and safest mortgages
For lenders, having these two rules in alignment provides the clarity they’ve long been asking for, widening and deepening loan eligibility and availability, which has been one of the main stumbling blocks to increased home sales.
Homebuyers will have now more credit availability reflecting an increase in home purchases, and refis. Way to go!